Government eyes fuel excise tax suspension

METRO MANILA --- The government is considering suspending excise taxes on fuel products imposed by the tax reform law to mitigate the effects of soaring global oil prices, a Palace official said.

Presidential Spokesperson Harry Roque said the government is ready to suspend the collection of fuel excise taxes if world oil prices hit $80 per barrel.

"We're ready kung talagang umabot ng ganyan kataas, na isuspende ang koleksyon ng excise taxes pagdating sa produkto ng langis," Roque told reporters last May 22.

The first package of the administration's Tax Reform for Acceleration and Inclusion (TRAIN) law (RA 10963) was signed by President Rodrigo Duterte in December last year. It imposed higher fuel prices as of 2018 to mitigate the lowering of personal income tax rates and to provide capital for the government's aggressive infrastructure program.

Under the TRAIN, regular and premium unleaded gas went up by ₱7 per liter this year, and will rise by ₱9 in 2019, and ₱10 in 2021. Prices for diesel and fuel for public transportation increased by ₱2.50 per liter in 2018, and will rise by ₱4.50 in 2019 and ₱6 in 2020. Prices for liquefied petroleum gas (LPG) rose by ₱1 per kilogram and will rise another peso annually until 2020.

Section 43 of RA 10963 provides for the suspension of the implementation of fuel excise tax once Dubai crude oil prices reaches $80 per barrel for a period of three months before the scheduled next increase of fuel excise taxes.

"For the period covering 2018 to 2020, the scheduled increase in the excise tax on fuel as imposed in this Section shall be suspended when the average Dubai crude oil price based on Mean of Platts Singapore (MOPS) for three (3) months prior to the scheduled increase of the month reaches or exceeds eighty dollars (USD 80) per barrel," the law read.

Senators Bam Aquino and JV Ejercito had recently pushed for the suspension of the fuel excise tax imposed by TRAIN to mitigate the effects of inflation.

In a statement last May 22, the Department of Finance said that TRAIN contributed less than a percent to the inflation rate in April, when it reached a five-year high. (CNN Philippines Staff with contribution from senior correspondent Ina Andolong)